Caravel’s single train option shows impressive economics
Opting to go with a single processing train at its namesake copper project could seriously reduce costs for Caravel if the Pre-Feasibility Study Update is anything to go by.
While the original PFS had envisioned a 27.8Mtpa processing operation made up of two 13.9Mtpa capacity trains, the new option study considers a single 27Mtpa train that uses High Pressure Grinding Rolls (HGPR) to replace the usual Semi-Autogenous Grinding (SAG) Mills and the adoption of Coarse Particle Flotation (CPF).
The use of HGPR is important as it offers improved capital and operating costs and will be adopted in favour of SAG Mills for the Definitive Feasibility Study.
Likewise, the inclusion of CPF in the process flowsheet has the potential to reduce Capex and Opex.
This has the effect of simplifying construction, enhancing operability and improving both capital and operating costs, which is pretty much in line with Caravel Minerals’ (ASX:CVV) expectations.
So just what are some of the savings that the company can expect to see?
Well the changes promise to reduce processing cash costs by up to $1.23 per tonne of ore due to the reduction of peak power demand by up to 22 megawatts from the use of more efficient HGPR and CPF, and water consumption by about 1.8 gigalitres per annum.
Capex will be reduced by about $100m – with about $77m from the use of a single train and $23m from the adoption of HGPR and CPF, a substantial amount given the $1.2bn estimate for the two train development in the PFS and a reduction of all-sustaining-costs from US$2.55 per pound to US$2.37 per pound.
Unsurprisingly, these cost reductions are expected to significantly enhance project economics.
The lower processing costs are expected to deliver annual free cashflow by about $35m and increase project net present value – a measure of the project’s profitability – from $1.1bn to $1.5bn.
With the addition of the Single train option, Caravel now has three development options with demonstrated benefits which will now be incorporated into project base case design and financial model for use in the DFS.
The Caravel copper project in Western Australia’s Wheatbelt region has an ore reserve of 583Mt grading 0.24% copper, or 1.42Mt of contained copper.
This makes up 82% of the projected 28-year mine life.
Recent drilling has demonstrated that Caravel has plenty of room for growth, which is timely given that the forecast supply gap could hit up to 10Mt by the 2030s as copper demand increases from ~25Mt to more than 30Mt annually by the end of the decade.
This article was developed in collaboration with Caravel Minerals, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.